April 24: Nortel reports a first-quarter profit of $54 million, or one cent per share.

May 9: Nortel’s external auditor Deloitte tells the company’s audit committee “we are not aware of any material modifications that should be made” to the results.

July 24: Deloitte informs the audit committee of deficiencies in documentary support for certain accrued liabilities on the balance sheet as of June 30. The company initiates a comprehensive review of assets and liabilities.

Oct. 23: Preliminary findings of the review show that the company had over-stated liabilities by roughly $900 million U.S. Nortel revises financial statements accordingly.

November: Nortel’s audit committee hires Washington-based legal firm Wilmer Cutler as part of an independent review into the circumstances that led to the Oct. 23 restatement.

March 10: Nortel reveals that it will likely have to revise the restatement made in October.

March 15: Nortel appoints Bill Kerr as chief financial officer and MaryAnne Pahapill as controller on an interim basis, replacing Douglas Beatty and Michael Gollogly, who are placed on paid leave pending the completion of the audit committee’s work.

April 28: Nortel announces firing of Dunn, Beatty and Gollogly “for cause.” Board member Bill Owens is appointed CEO.

May: The U.S. Attorney for the Northern District of Texas begins a criminal investigation of Nortel’s accounting. The RCMP starts its probe around the same time. The U.S. opts early in 2008 not to pursue criminal charges.

2005

Jan. 11: Nortel releases a second restatement of revenue and earnings, along with a summary of a report by Wilmer Cutler that concluded that Nortel’s finance group had manipulated accounting to produce desired earnings in 2002 and early 2003. Dunn, Beatty and Gollogly deny they manipulated the earnings. (The Wilmer Cutler report and related interviews are excluded from the 2012 trial because they didn’t meet the standard of evidence for a criminal proceeding.)

January: Nortel files claims against Dunn, Beatty and Gollogly, seeking the return of payments made to them under the company’s bonus plans.

2006

Feb. 8: Nortel announces the settlement of seven class-action lawsuits in Canada and the U.S. by agreeing to pay shareholders $575 million U.S. in cash and 62.9 million shares (the agreement was finalized in March 2007).

March 10: Nortel says it will restate its financial numbers for the third time — after the audit committee’s review determined that the firm’s finance group had improperly accounted for revenues in contracts that contained multiple commitments to customers. Dunn and his colleagues deny the accounting was improper.

March 1: Nortel says it will restate its financial numbers for the fourth time.

March 12: The SEC files civil charges fraud against Dunn, Beatty, Gollogly and Pahapill. It alleges Dunn, Beatty and Pahapill altered Nortel’s revenue recognition policies to accelerate revenue as needed to meet forecasts — and that from at least July 2002 to June 2003, Dunn, Beatty and Gollogly improperly established, maintained and released reserves to meet earnings targets. The executives say they did not contravene accounting rules.

March 12: The Ontario Securities Commission issues a notice of hearing to consider orders to apply a variety of penalties to Dunn, Beatty and Gollogly.

March 27: The OSC statement of allegations asserting that Dunn, Beatty and Gollogly authorized, permitted or acquiesced in making material misstatements in filings to the OSC is released.

May 22: The OSC approves a settlement with Nortel under which the firm agrees to keep the OSC apprised of its progress in fixing accounting and related issues. Nortel agrees to pay $1 million to help cover the cost of the OSC investigation.

Oct. 15: The SEC files civil fraud charges against Nortel, alleging the firm engaged in accounting fraud from 2000 to 2003 to close gaps between its true performance and internal targets and/or Wall Street expectations. Without admitting or denying the charges, Nortel settles with the SEC by consenting to pay a $35-million civil penalty, which the SEC will place in a Fair Fund to distribute to affected shareholders.

2008

April 30: The SEC announces that Johnson, Kinney and Taylor (vice-presidents of finance, respectively, for Nortel’s wireline, wireless and enterprise business units) agreed to settle SEC’s charges against them arising from their alleged involvement in Nortel’s earnings management fraud during 2002 and 2003. Each pays fines of $75,000 and other penalties. Hamilton and Pahapill deny the charges.

June 19: The RCMP announces criminal charges against Dunn, Beatty and Gollogly, alleging fraud affecting the public market, falsification of books and documents and false prospectus. The three executives deny the charges.

2009

Jan. 14: Nortel files for bankruptcy protection.

Sept. 3: The SEC’s case against Dunn, Beatty, Gollogly and Pahapill is stayed pending the resolution of Canadian criminal proceedings.

Oct. 29: The SEC creates a Fair Fund, totalling $35.5 million, consisting of payments by Nortel, Johnson, Kinney and Taylor. A court-approved plan of distribution to investors is finalized on Oct. 5, 2011. It covers purchases of Nortel common shares from Oct. 24, 2000 to Feb. 15, 2001 and/or April 24, 2003 to April 27, 2004.

2011

July 1: Nortel reaches a deal to sell the last of its assets.

2012

Jan. 16: The criminal trial against Dunn, Beatty and Gollogly begins in Toronto.

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